Exploding Thai household debts a growing concern

Reading Time: 1minuteShopping mall in Bangkok: Thais are spending more than they earn

The Bank of Thailand on June 15 issued a warning that escalating household debt in the country was posing a risk to the country’s financial stability and “warrants close monitoring.”

Data show household debt grew to 78 per cent of GDP in 2012 from 63 per cent at the end of 2010 and 44 per cent in 2003.

Private debt totaled 8.82 trillion baht ($28.3 billion) in 2012 or 439,000 baht ($14,161) per household, based on 20.1 million households at the end of the year, the central bank said in a statement.

Total personal income grew by 7.3 per cent in 2012, while consumer borrowing rose by 21.6 per cent, which showed that Thais are spending more than they earn. Debt was 0.82 times of personal income last year compared with 0.74 times in 2011.

In the consumer-loan segment, credit for car and motorcycle leasing grew 33.9 per cent in 2012 compared with 2011. The boost came from the government’s first-car policy that offered tax reductions. Credit for property purchases grew 11.6 per cent.

“Even though a portion of household debt was for houses and durable assets, the rapid increase could reduce household liquidity while threatening their debt service ability when risks increase,” the statement said.

Reading Time: 1minuteShopping mall in Bangkok: Thais are spending more than they earn

The Bank of Thailand on June 15 issued a warning that escalating household debt in the country was posing a risk to the country’s financial stability and “warrants close monitoring.”

Data show household debt grew to 78 per cent of GDP in 2012 from 63 per cent at the end of 2010 and 44 per cent in 2003.

Private debt totaled 8.82 trillion baht ($28.3 billion) in 2012 or 439,000 baht ($14,161) per household, based on 20.1 million households at the end of the year, the central bank said in a statement.

Total personal income grew by 7.3 per cent in 2012, while consumer borrowing rose by 21.6 per cent, which showed that Thais are spending more than they earn. Debt was 0.82 times of personal income last year compared with 0.74 times in 2011.

In the consumer-loan segment, credit for car and motorcycle leasing grew 33.9 per cent in 2012 compared with 2011. The boost came from the government’s first-car policy that offered tax reductions. Credit for property purchases grew 11.6 per cent.

“Even though a portion of household debt was for houses and durable assets, the rapid increase could reduce household liquidity while threatening their debt service ability when risks increase,” the statement said.